The purpose of this guide is to give an overview of taxes in Italy for Expats. First, it explains general concepts of tax residence in Italy. This helps you understand which category you belong to. Then, the guide focuses on different taxes you might have to pay. These include taxes on financial assets, properties, or income.
Do expats pay income tax in Italy?
Understanding the ‘tax residence‘ concept is the first step to determine how an individual’s income will be taxed in Italy.
For expat individuals who are arriving in or leaving Italy it is important to understand what their Italian tax residence status will be.
Tax resident individuals
Tax residents are subject to taxation in Italy on their income wherever produced, under the so-called ‘worldwide principle’. Therefore, tax residents are subject to taxation on income from foreign sources. This includes:
- income from real estate owned outside of Italy;
- foreign interests, dividends, and capital gains;
- foreign compensations;
- other foreign income (ex. Malta).
Where foreign-source income is also taxable abroad, Italian residents may be entitled to a foreign tax credit under Article 165 of the Italian Income Tax Code subject to the relevant conditions and limits and any applicable double taxation treaty.
Non-tax resident individuals
Non-tax residents are subject to taxation only on income produced in Italy. According to the “mirror-like” reading of art. 23 of Italian Tax Code (“T.U.I.R.”), the category of income produced in the territory of the State includes:
- income from rented immovable property located in Italy;
- investment income paid by the Italian State, Italian residents or Italian permanent establishments of non-residents, to the extent covered by Article 23, subject to statutory exemptions and treaty provisions;
- income from employment performed in Italy;
- income from self-employment produced by activities carried out in Italy;
- profits deriving from business activities carried out in Italy through permanent establishments of the foreign Entity;
- other income from activities carried out in Italy and from assets located on the territory of the State;
- capital gains from transfers of shareholdings in Italian resident companies and other taxable financial assets, only where the applicable Italian-source rules of Article 23 apply, subject to exemptions and tax treaty provisions.
Individual Tax Residency in Italy
The domestic tax legislation of each State provides the conditions according to which an individual is deemed a tax resident of that State.
Italian tax year follows the calendar year (e.g., 1st January – 31st December). Therefore, an individual is regarded as a tax resident in Italy for the whole tax year, while there is no concept of a split tax year, unless a specific Double Tax Treaty provides for this.
According to Article 2, paragraph 2, of the Italian Tax Code (“T.U.I.R.”), as amended by Legislative Decree No. 209/2023 and applicable from the 2024 tax year, an individual is considered resident in Italy for tax purposes if, for most of the tax year (at least 183 days, or 184 days in leap years), including non-consecutive periods, one of the conditions listed below is met:
- registration with the Italian Resident Population Registry (“Anagrafe”) gives rise to a rebuttable presumption of Italian tax residence, unless contrary evidence is provided; or
- the individual is domiciled in Italy for income tax purposes, meaning the place where their personal and family relationships are primarily developed, under the special definition of Article 2(2) TUIR; or
- the “residence” is in the territory of the Italian State, as defined by Section 43 of the Italian Civil Code (the place where the individual has the habitual abode, where the person usually lives); or
- the individual is physically present in Italy for most of the tax year, taking into account fractions of a day.
Meeting at least one of the above conditions, even without continuity, for the major part of the tax year is sufficient to qualify the individual as an Italian tax resident.
Registration within the Register of the Italian Resident Population
From the 2024 tax year, registration in the Italian Resident Population Registry constitutes a rebuttable presumption of Italian tax residence. The individual may provide evidence to the contrary, without prejudice to the other alternative residence criteria.
Registration requirements depend on nationality and immigration status: EU/EEA citizens who remain in Italy for more than three months must generally register with the municipality under Legislative Decree 30/2007, while third-country nationals must comply with the specific residence-permit and registration rules applicable to their status. There is no single three-month registration deadline applicable to all foreigners.
Italian nationals who transfer their residence abroad for a period exceeding 12 months are generally required to register with the Registry of Italians Resident Abroad (“AIRE”) within 90 days of transferring their residence. The 12-month threshold refers to the expected duration of residence abroad and does not mean that individuals must wait 12 months before registering. AIRE registration facilitates access to consular services, including the issuance of identity and travel documents, and enables eligible citizens to vote from abroad in Italian parliamentary elections and national referendums.
Foreign nationals transferring their habitual residence abroad must generally notify the municipality within 20 days to cancel their Anagrafe registration. Italian citizens moving abroad must generally register with AIRE. However, AIRE registration alone does not automatically end Italian tax residence. Since 2024, tax residence depends on civil-law residence, tax domicile or physical presence in Italy for most of the tax year, while Anagrafe registration creates a rebuttable presumption of tax residence. Residence may also continue if the person moves to a “blacklist” country.
The “White” and “Black” lists
Italian law does not establish a general “whitelist-country” exemption from the statutory Italian tax-residence tests. In ordinary cases, however, the tax authorities must substantiate Italian residence; if residence is claimed in two countries, the applicable tax treaty must be examined separately.
Under Article 2(2-bis) TUIR, a rebuttable presumption of Italian tax residence applies specifically to Italian citizens who have been removed from the resident population registers and have moved to States or territories identified by the Ministerial Decree of 4 May 1999, as amended. The presumption does not automatically extend to every foreign citizen or every jurisdiction described informally as “blacklisted”. In these cases, the individual must prove they reside in the foreign country and not in Italy.
The Domicile in Italy
The Italian Civil Code defines the domicile as the place where the person has established the centre of business and interests.
For income tax purposes from 2024, however, Article 2(2) TUIR expressly defines domicile differently from Article 43 of the Civil Code: it is the place where the taxpayer’s personal and family relationships are primarily developed. A separate civil-law description must not replace this tax-specific test.
Therefore, two elements are to be considered:
- the objective element: the principal location of the individual’s personal and family relationships, assessed on the facts for income tax purposes from 2024;
- the subjective element: the circumstances demonstrating where such personal and family relationships are primarily developed; the former civil-law/economic centre-of-interests formulation is not the statutory definition of tax domicile from 2024.
From 2024, Italian tax domicile must be established primarily by reference to where the individual develops their personal and family relationships; a wish to maintain a centre of business activities in Italy is not, by itself, the legal criterion under Article 2(2) TUIR.
The “centre of vital interests” may be relevant in treaty tie-breaker analysis; for Italian domestic tax residence from 2024, the statutory domicile test specifically focuses on personal and family relationships and must be kept distinct from the treaty test.
In principle, maintaining family relationships in Italy is an important factor leading to a domicile in Italy.
The treaty concept of “centre of vital interests” may consider personal and economic ties as required by the applicable treaty; it must not be confused with the separate, domestic tax-residence definition of domicile introduced from 2024.
The Italian Residence (Habitual Abode)
The Italian Civil Code defines residence as the place where individuals have their own habitual residence.
In addition to the civil-law habitual-abode criterion, physical presence in Italy for most of the tax year is a distinct Italian tax-residence test from 2024. For that test, fractions of a day spent in Italy count, and the days need not be consecutive.
The first component of the residence test is an objective element, consisting of the taxpayer’s physical presence in Italy. The physical presence in Italy must be regular and continuous, as opposed to sporadic and occasional.
A stable and continuous presence in Italy still exists when taxpayers frequently travel abroad. This applies even for long periods.
It must be proved by considering all other circumstances of the particular case. Evidence includes maintaining a home in Italy.
Also relevant is returning to Italy whenever possible. Keeping the center of social and family relations in Italy matters. These factors show the intention to treat Italy as home indefinitely.
The second component of the residence test is a subjective element consisting of the taxpayers’ intention to stay and live in Italy for the foreseeable future.
To determine the intention to move to and live in Italy for the undefined future, reference is made to various factors such as the taxpayers’ overall conduct, social and personal habits, working relationships, family relationships, business, and personal activities, and so forth.
Other cases
Italian nationals leaving Italy may still be regarded as resident in Italy. This applies even if they are enrolled in AIRE. Factors include:
- ownership and use of property in Italy;
- maintaining the family house in Italy;
- registration of minor children in Italian schools;
- maintaining current accounts in Italy for investments;
- frequent participation in business meetings in Italy;
- registration to sports clubs or societies in Italy.
For foreign nationals leaving Italy, complications may still arise if they continue to maintain family or property in Italy.
These facts are indicators to assess against the applicable statutory residence criteria; the mere existence of a bank account or an investment in Italy does not automatically establish Italian tax residence. Treaty tie-breaker rules may be relevant where dual residence arises.
Taxes to pay in Italy for Expats
Personal income tax, also known as the Imposta sui redditi delle persone fisiche (IRPEF)
Personal income tax is levied at progressive tax rate on taxable income subject to ordinary IRPEF, which may include the following categories of income and pensions; other income types can be taxed separately or under substitute regimes:
- Employment income;
- Business income;
- Self-employment income;
- Real estate income.
The gross taxable income is determined by the sum of the taxable incomes of the above categories subject to ordinary taxation.
As of 2023, the brackets were as follows:
|
Tax rates applicable from 1.1.2022 to 31.12.2023 Law No. 234 of 30 December 2021 (Budget Law 2022) |
|||
| Taxable Income | Tax Rate | IRPEF (gross) | |
| More than | Up to | ||
| 0€ | 15.000€ | 23% | 3.450€ |
| 15.001€ | 28.000€ | 25% | 3.450€ + 25% on the part exceeding 15.000€ |
| 28.001€ | 50.000€ | 35% | 6.700€ + 35% on the part exceeding 28.000€ |
| 50.001€ | 43% | 14.400€ + 43% on the part exceeding 50.000€ | |
For the 2024 tax year only, the IRPEF brackets were as follows:
|
Tax rates applicable from 1.1.2024 to 31.12.2024 Legislative Decree No. 216 of 30 December 2023, Article 1(1) |
|||
| Taxable Income | Tax Rate | IRPEF (gross) | |
| More than | Up to | ||
| 0€ | 28.000€ | 23% | 6.440€ |
| 28.001€ | 50.000€ | 35% | 6.440€ + 35% on the part exceeding 28.000€ |
| 50.001€ | 43% | 14.140€ + 43% on the part exceeding 50.000€ | |
For 2025, the three IRPEF brackets (23%, 35%, 43%) became permanent. From 1 January 2026, the rate on the portion of ordinary taxable income exceeding €28,000 and up to €50,000 is reduced to 33%. The 2026 national IRPEF schedule is shown below; regional and municipal additional taxes, deductions and tax credits are calculated separately.
|
Tax rates applicable from 1.1.2026 Law No. 199 of 30 December 2025, Article 1(3) |
|||
| Taxable Income | Tax Rate | IRPEF (gross) | |
| More than | Up to | ||
| 0€ | 28.000€ | 23% | 6.440€ |
| 28.001€ | 50.000€ | 33% | 6.440€ + 33% on the part exceeding 28.000€ (13.700€ at the upper limit) |
| 50.001€ | 43% | 13.700€ + 43% on the part exceeding 50.000€ | |
A new consolidated Income Tax Code has been enacted by Legislative Decree No. 117 of 19 June 2026 (in force since 4 July 2026). Its provisions apply from 1 January 2027; until 31 December 2026, references in this article to the existing Income Tax Code (Presidential Decree 917/1986) remain relevant. The article references must be reviewed again for tax periods starting in 2027.
Additional Regional Tax
The additional regional personal income tax (addizionale regionale IRPEF) varies according to the taxpayer’s region of tax domicile and the relevant tax year; applicable brackets, rates and possible reliefs should be checked against the official annual regional schedules.
Additional Municipal Tax
The municipal additional income tax depends on the relevant municipality and tax year, with rates and possible exemption thresholds set by the municipality within statutory limits. The applicable rates and thresholds should be checked against the official annual municipal schedules.
Municipalities can establish progressive tax rates applicable to the national income bracket.
Tax on Investment income in Italy
Dividend income
Starting from the fiscal year 2018, dividends from qualified shareholdings are subject to the same tax treatment as non-qualified shareholdings, which entails a 26% substitutive tax.
The 26% rate is the general rule for qualifying and non-qualifying shareholdings held by individuals outside business assets; exceptions include certain distributions from privileged-tax jurisdictions and other specifically regulated situations. Tax treatment must therefore be checked on the facts.
Dividends paid to non-residents may be subject to a lower tax rate if there are tax treaties in place.
Interest income
The taxation of interest varies based on its source. Interest on Italian government bonds and other securities eligible for the statutory preferential regime generally benefits from the 12.5% rate. Interest on other investments generally attracts 26%, subject to the statutory rules and applicable exemptions; not every foreign government bond automatically qualifies for the preferential rate.
However, interest earned on foreign bank accounts may be subject to a 26% substitute tax through the income tax return.
Capital Gains
Capital gains are categorized as miscellaneous income. The tax is calculated based on the difference between the selling price and the purchase cost, which may include any additional legal and administrative expenses.
Starting from January 1, 2019, non-business individuals are subject to a flat tax of 26% on capital gains earned from both qualified and non-qualified participation in Italian and foreign companies.
Italian Taxes on Capital
Municipal Property Tax (IMU – Imposta Municipale Propria)
From January 1st, 2020, the TASI tax (Tax on Inseparable Services) has been abolished and incorporated into the new IMU tax. IMU is generally payable by the owner or holder of a taxable real right over Italian property. The exemption is for the statutory “abitazione principale” (the property where the taxpayer both habitually lives and is registered as resident), subject to the specific rules and with no ordinary exemption for categories A/1, A/8 and A/9 (luxury properties).
The tax is calculated based on the value of the property in the property registers, which is the rendita reevaluated by 5% and then multiplied by a given coefficient (such as 160). For ordinary non-exempt buildings, the basic IMU rate under Article 1(754) of Law 160/2019 is 0.86%, subject to the rates lawfully set by each municipality.
The new IMU tax is typically due in two installments, one by June 16 and the other by December 16 of the current year.
Italian Tax on Waste (TARI – Tassa rifiuti)
TARI stands for Tassa sui rifiuti (waste tax), distinct from the abolished TASI. Its assessment depends on the rules governing waste-service charges, typically taking into account usable areas, household characteristics or economic activity, and locally applicable tariffs.
TARI is generally payable by the person who possesses or occupies premises or open areas capable of producing urban waste, even without ownership. Where the occupation or detention does not exceed six months in the same calendar year, the tax is payable solely by the owner or holder of the relevant real right, in accordance with Article 1(643) of Law 147/2013.
Tax on properties abroad, also known as Imposta sul valore degli immobili situati all’estero (IVIE)
IVIE is applicable to real estate properties located outside Italy and owned by an individual considered a resident for Italian tax purposes.
The persons liable may also include Italian tax residents who hold usufruct or other relevant real rights over foreign real estate; special rules and exemptions apply, including those concerning a foreign main home.
The IVIE is calculated based on the value of the real estate property, which is determined as the purchase cost resulting from the purchase act or the current market value at the location of the real estate property.
For real estate located in an EU or EEA country with an information exchange agreement with Italy, the wealth tax is calculated based on the cadastral value in force in the foreign country. If no cadastral value is available, the tax is calculated based on the purchase cost or the market value at the property’s location.
For the fiscal year 2023, the tax rate for IVIE is 0.76%, and if the tax amount is lower than €200, then no tax is due. Furthermore, suppose the property is already subject to a property tax in the country where it is located. In that case, the individual can deduct that amount from the tax due in their Italian tax return.
The €200 threshold is tested according to the statutory IVIE calculation rules and is not an exemption threshold based merely on a property’s purchase price. A credit is generally available for qualifying foreign patrimonial taxes on the same property, within the amount of Italian IVIE due and subject to the statutory conditions.
The wealth tax is determined when filing the Italian tax return.
Law No. 213 of 30 December 2023, Article 1(91)(a), increased the standard IVIE rate with effect from the 2024 tax year.
The standard IVIE rate is 1.06% from the 2024 tax year, subject to the statutory exemptions and rules for particular properties.
Tax on financial assets held abroad, also known as Imposta sul valore delle attività finanziarie detenute all’estero (IVAFE)
The taxable base for this tax is the value of financial investments as of December 31 or the end of the holding period. For the fiscal year 2023, the applicable tax rate is 0.2%.
For foreign current accounts, IVAFE is generally due as a fixed annual amount of €34.20 per account, adjusted for the period and ownership percentage, where the relevant average annual balance exceeds €5,000; the calculation of the average and any aggregation must follow the statutory rules.
Law No. 213 of 30 December 2023 (Budget Law for 2024) also provides for an increase in wealth tax rates on foreign financial activities.
From the 2024 tax year, IVAFE generally remains at 0.2% for foreign financial products, but applies at 0.4% to products held in States or territories identified by the Ministerial Decree of 4 May 1999, as subsequently amended.
The wealth tax will be determined upon filing of the Italian tax return.
Separate from IVAFE, Italian tax residents must assess their foreign-asset disclosure obligations in the RW section of the tax return. Foreign deposits and current accounts are generally exempt from monitoring where their maximum aggregate balance does not exceed €15,000 during the year, but reporting remains required if IVAFE is due; the €5,000 IVAFE rule must not be confused with the €15,000 monitoring threshold.